I think the bubbles are basically a good way to visually guide people within the limits of the hardware.
Having a flowing line on the floor, or in the air above you would be better, but would make the imperfect tracking much more noticeable.

I think its a good solution :)

I’m also very glade microsoft is getting into this area.
A lot of their side technologys;http://www.technologyreview.com/blog/editors/23023/
Like Photosyth and “Writting in the air”, will be just perfect for use with AR.
Specificaly I feel photosynth could become a good referance point source for markerless tracking outside.